Malaysia’s Investment, Trade, and Industry Minister Datuk Seri Johari Abdul Ghani stated that the US-Malaysia Agreement on Reciprocal Trade (ART) no longer holds any legality. He further claimed the deal was not suspended or paused, but terminated.

“It is not on hold. It is no longer there, it’s null and void,” Johari said, as reported by the New Straits Times. He further told reporters that if tariffs were imposed and legitimised based on a trade surplus, authorities should clearly specify the industry involved instead of implementing the mechanism on a blanket basis.

The ART was signed on the sidelines of the 47th ASEAN Summit in Kuala Lumpur in October 2025, with Donald Trump and Prime Minister Anwar Ibrahim as signatories. The agreement covered roughly 12% of Malaysia’s exports to the United States, offering improved market access for Malaysian exporters while making American products more competitive for Malaysian businesses. Under its terms, the world’s largest economy maintained a 19% reciprocal tariff on most Malaysian imports, with carve-outs for select goods.

The voiding of the deal comes at a particularly fraught moment. In March, the Trump administration launched a sweeping Section 301 trade investigation, authorised under the Trade Act of 1974, targeting 16 trading partners, including Malaysia.

Section 301 allows Washington to impose additional tariffs on countries found to be engaging in unfair trade practices. Johari identified Malaysia’s key vulnerable sectors as electrical and electronics, oil and gas, plantation commodities including palm oil, rubber gloves, and other rubber-based goods.

He stressed that Malaysian exporters must ensure compliance with labour and environmental standards to minimise exposure.

Domestically, the development has triggered a political response. Opposition coalition Perikatan Nasional has called for a special parliamentary session to address the collapse of the agreement, with secretary-general Takiyuddin Hassan warning of potential damage to export sectors and supply chains.

Donald Trump, for his part, has warned of significantly higher retaliatory tariffs against any nation attempting to exploit the Supreme Court ruling to unpick existing trade arrangements, a threat that hangs directly over Kuala Lumpur’s decision.

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President Donald Trump, during his visit to Kuala Lumpur to attend a summit of the Association of Southeast Asian Nations (ASEAN), signed reciprocal trade deals with his Malaysian and Cambodian counterparts, apart from sealing a framework trade pact with Thailand that will see the countries work to address tariff and non-tariff barriers.

According to joint statements released by the White House, the United States will maintain a tariff rate of 19% on exports from all three countries under the deals, with the levy to be reduced to zero for some goods. Washington also announced a similar framework deal with Vietnam, which has levied a tariff rate of 20% on its exports to the United States.

The Southeast Asian nation, which recorded a trade surplus of USD 123 billion with the world’s largest economy in 2024, has pledged to vastly boost its purchases of American products to reduce the trade gap between the two countries.

Under the separate deals signed with Thailand and Malaysia, the Trump administration will seek cooperation to diversify critical minerals supply chains amid competing efforts from Beijing in the rapidly growing sector. The Xi Jinping administration is in talks with Kuala Lumpur on rare earths processing, with Malaysian sovereign wealth fund Khazanah Nasional expected to partner with a Chinese firm to build a refinery in Malaysia.

China, the world’s top miner and processor of rare earths, has imposed increasingly stringent export controls on its refining technology, sending global manufacturers scrambling to secure alternative supplies for critical minerals used widely in semiconductor chips, electric vehicles, and military equipment.

Malaysia, which has an estimated 16.1 million tonnes of rare earth deposits, has banned the export of raw rare earths to prevent the loss of resources as it looks to develop its downstream sector. However, Washington will get an exemption here, as Kuala Lumpur will now refrain from banning or imposing quotas on exports to the US of critical minerals.

While under the deals the four Southeast Asian countries pledged to remove trade barriers and provide preferential market access to various American goods, the commitments also covered areas like digital trade, services, and investments, as well as promises by the Southeast Asian countries to protect labour rights and strengthen environmental protections.

Thailand, Malaysia, and Vietnam agreed to accept vehicles built to US motor vehicle safety and emissions standards. Talking about Thailand, it would eliminate tariff barriers on approximately 99% of goods and relax foreign ownership restrictions for US investment in its telecommunications sector.

Both sides also took note of several forthcoming commercial deals between Thai and American companies, including the purchases of agricultural products such as feed corn and soybean meal worth an estimated USD 2.6 billion per year.

Thailand has also committed to purchases of 80 US-made aircraft totalling USD 18.8 billion and energy goods, including liquefied natural gas and crude oil, of around USD 5.4 billion annually.

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The UAE’s national airlines have expanded their flights to Malaysia to keep up with the momentum of the thriving joint strategic partnership between the two countries.

The General Civil Aviation Authority (GCAA) told Emirates News Agency (WAM) that the UAE’s national carriers – Etihad Airways, Emirates and Air Arabia – are operating 112 monthly flights and 28 weekly flights, respectively, from Abu Dhabi, Dubai and Sharjah to the Malaysian capital Kuala Lumpur.

The GCAA stated that Etihad Airways, Emirates and Air Arabia operate 7, 14 and 7 weekly flights respectively from Abu Dhabi, Dubai and Sharjah to Kuala Lumpur.

Etihad Airways began flying to Kuala Lumpur in 2007 and has since flown 2.7 million passengers to the Malaysian capital.

In 2019, Etihad Airways signed a partnership with Tourism Malaysia to attract visitors from Europe and the Middle East to Malaysia via the airline’s Abu Dhabi hub.

Emirates began connecting Dubai (DXB) to Kuala Lumpur (KUL) in 1995. The airline offers travel services from Malaysia through its global network of over 140 destinations. Emirates announced it will increase its weekly flights to Malaysia to 21 in early June.

Air Arabia sees its flights to Malaysia as an important step in its plans to expand into the Asian aviation market and offer its customers value-added travel options to international destinations such as Kuala Lumpur. The capital is one of the world’s most popular travel destinations with a wide variety of sights and attractions.

Meanwhile, recently, Air Arabia has had a great run on the share market with its stock up by a significant 7.9% over the last month.

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In a statement announcing his resignation,  Azharuddin Abdul Rahman said the report had highlighted failures by air traffic control to comply with standard operating procedures, but had not suggested the aviation authority was to blame for the loss of the aircraft.

“Therefore, it is with regret and after much thought and contemplation that I have decided to resign as the Chairman of Civil Aviation Authority of Malaysia effective 14 days from the date of the resignation notice which I have served today,” he stated.

In the 495-page report, investigators concurred that the controls of the aircraft were likely deliberately manipulated to take it off course – although they were unable to determine who was responsible for it.

However, the report did highlight the mistakes made by the Kuala Lumpur air traffic control. It stated that the air traffic controllers had failed to initiate standard emergency phases, and that there was no record of them taking any action to alert the air force or keep a continuous watch on the radar display.

Malaysian Transport Minister Anthony Loke announced the formation of an internal committee, that would come up with recommendations and possible actions that could be taken against air traffic controllers on duty at the time, in a statement.

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April 9,2015: The ASEAN Economic Community (AEC) could push local companies to become regional powerhouses, says Frost & Sullivan.

Nitin Bhat, Partner & Head of Consulting at Frost & Sullivan said that to increase the competitiveness of Malaysian companies and prepare them better for further economic integration, local companies need to move away from low-labour cost production operations.

“The government also should invest heavily in upgrading technical and vocational training through closer collaboration with private sector,” he said ahead of his presentation ASEAN Economic Community.

Frost & Sullivan’s Growth, Innovation and Leadership (GIL) summit is focused on sharing, engaging and inspiring a continuous flow of new ideas and fresh perspectives which leverage innovation as a resource to help address global challenges. The Malaysia edition of GIL will be held on April 14, 2015 at the Mandarin Oriental Kuala Lumpur.

Bhat also said that better access to capital to finance acquisitions for mid-sized companies and the organization of business-to-business matchmaking exercises would also help raise the competitiveness of Malaysian companies ahead of AEC implementation.

He said that CIMB’s pioneering overseas expansion work will become a business sustainability necessity, instead of the exception.

He added that further liberalization of sectors will result in cross-border investments in the financial, infrastructure and logistics, energy, utilities, food, retail and healthcare sector.

He said that countries that take the lead in consumer protection will be hosting the next generation of innovators.

Bhat said there are various challenges faced in making AEC a reality. “The free flow of skilled workers is more lip-service than actual reality as individual economies have yet to align and coordinate their domestic rules and regulations to the regional initiative,” he added.

He also said that creating a single market will be a long battle in which domestic interests are likely to prevail for the coming 10-20 years.

He noted that the ASEAN Way has been a viable strategy in conflict resolution and kick-starting the concept of AEC. However, its way of working inherently inhibits bolder steps towards achieving the 2015 AEC and 2020 Vision, he said, adding that a shift from consensus and cordiality towards commitment, accountability (sanctions), monitoring and transparency is needed for AEC to be a success.

Press Release

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